Charts I’m Watching: Aug 11, 2014

Lots to catch up on after a week off… starting with last week’s big decline and (so far) recovery.  It wasn’t really that big.  But, when declines are so few and far between, it sure felt like it.  Check out SPX, which (finally) tested the trend line off the 2011 lows.

2014-08-11-SPX daily 0600

Looks pretty straight-forward, but it’s not.  In order to accommodate the Nov 2012 lows, the TL misses all of the 2013 and 2014 interim lows.  If we raise the TL a bit to catch at least the 2014 lows, then last week’s dip was below the TL, and the rebound through this morning is a backtest.

2014-08-11-SPX daily 0650

To further complicate matters, those are logarithmic charts.  In arithmetic mode, the TL fit is fairly bullish…

2014-08-11-SPX daily 0700 arith

…especially, when considering the moving averages.  Note the SMA100 tag, and the SMA10 which is being tested this morning.

2014-08-11-SPX daily 0700 arith MAs

It’s pretty clear to me that the algos are back in control this morning, with USDJPY/NKD ramps handily thwarting any attempts to digest any of the overnight gains. Bottom line, last week’s decline seemed rather contained/controlled.  My gut tells me it was permitted in order to bring a semblance of normality to the “markets” — to squelch the [quite accurate] criticism that the rally is being engineered.

More later.

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